Correlation Between 78490FMG1 and Valneva SE

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Can any of the company-specific risk be diversified away by investing in both 78490FMG1 and Valneva SE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining 78490FMG1 and Valneva SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US78490FMG18 and Valneva SE ADR, you can compare the effects of market volatilities on 78490FMG1 and Valneva SE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in 78490FMG1 with a short position of Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of 78490FMG1 and Valneva SE.

Diversification Opportunities for 78490FMG1 and Valneva SE

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 78490FMG1 and Valneva is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding US78490FMG18 and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR and 78490FMG1 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on US78490FMG18 are associated (or correlated) with Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of 78490FMG1 i.e., 78490FMG1 and Valneva SE go up and down completely randomly.

Pair Corralation between 78490FMG1 and Valneva SE

Assuming the 90 days trading horizon US78490FMG18 is expected to generate 0.83 times more return on investment than Valneva SE. However, US78490FMG18 is 1.21 times less risky than Valneva SE. It trades about -0.12 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.12 per unit of risk. If you would invest  8,958  in US78490FMG18 on September 29, 2024 and sell it today you would lose (958.00) from holding US78490FMG18 or give up 10.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy42.86%
ValuesDaily Returns

US78490FMG18  vs.  Valneva SE ADR

 Performance 
       Timeline  
US78490FMG18 

Risk-Adjusted Performance

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Weak
Over the last 90 days US78490FMG18 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for US78490FMG18 investors.
Valneva SE ADR 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

78490FMG1 and Valneva SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 78490FMG1 and Valneva SE

The main advantage of trading using opposite 78490FMG1 and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 78490FMG1 position performs unexpectedly, Valneva SE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Valneva SE will offset losses from the drop in Valneva SE's long position.
The idea behind US78490FMG18 and Valneva SE ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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